Month: December 2017

Getting the most effective agriculture investment is usually tricky for the inexperienced investor with small or no expertise in the sector but you can find obviously quite a few unique possibilities obtainable which includes agriculture investment funds, direct agricultural land investment and acquiring equities in agricultural providers. Within this report I’ll go some approach to investigating the unique alternatives the hazards they present to investors the mechanics of how each and every sort of agriculture investment functions along with the returns which might be presently getting accomplished.

Firstly we’ll take a look at the relevance of agriculture investment for the present financial climate and regardless of whether this unique sector shows us the indicators of becoming capable to produce growth and earnings.

The present Financial Climate

The worldwide economic climate continues to be within a state of turmoil and also the UK in distinct is cutting back public spending to cut back an unmanageable national debt the population is increasing and quantitative easing is probably to lead us into a period of extended inflation. Also the lack of financial visibility implies that it’s extremely tough to worth assets like stocks and rates of interest getting so low implies that our money deposits aren’t producing any tangible earnings to speak of.

So what does this imply for investors? It implies that we have to acquire assets which have a good correlation with inflation i.e. they go up in worth faster than the rate of inflation these assets ought to also produce an revenue to replace the revenue we’ve lost from money and lastly any asset that we obtain need to also possess a powerful and measurable track record.

It is actually pretty clear that agriculture investment particularly investing in agricultural land displays the characteristics of growth earnings a good correlation with inflation is simple to worth and features a clear and evident track record to analyze and as such agriculture investment ticks all the relevant boxes to possibly develop into the excellent asset class for investors these days.

Agriculture Investment Fundamentals

The fundamentals supporting agriculture investment are fairly simple to measure; because the worldwide population grows we have to have far more food to create additional food we need to have far more agricultural land as this can be the resource that gives all the grain and cereals that we consume and all the space to graze the livestock that finish up on our plate. So we’re coping with an incredibly fundamental query of provide and demand if demand increases and provide cannot maintain up the worth in the underlying asset increases so let’s take a look at a number of the crucial indicators of provide and demand for agriculture investment.

So the fundamentals supporting agriculture investment are sound and extremely obviously demonstrate a superb image for prospective investment. But can we absorb price tag inflation? Effectively you can find a myriad of reports that inform us really obviously that as a population we absorb increases in food costs pretty much 100% and sacrifice spending in other regions so yes we are able to.

To speak about threat for any moment the threat involved with this fund based investment technique is the fact that you give more than manage to a fund manager who will invest your funds for you personally and obtain assets that he or she believes are relevant. Also if 1 fund performs badly that typically features a knock on impact for other agriculture investment funds as self-confidence within this certain method requires a hot it is possible to thus shed worth by means of no fault of one’s personal. You also must spend a fund management fee consuming into your earnings.

When it comes to the returns 1 can count on from a fund this varies wildly but most project annual returns of about 10% while this can differ based on a complete host of aspects like the fund management investment method and common industry circumstances.

The vast Indo-Gangetic Plain, extending from Punjab to Assam, is most intensively farmed zone of the world. Since independence contribution of agriculture to GDP has seen a decline, even after the green revolution. Our economic security concerns still depend upon agriculture as still 58% of the population is dependent on Agriculture compared to 75% at the time of independence. Around 51% of Indias geographical area is already under cultivation as compared to 11% of the world average. India leads the world in production of a few agriculture commodities. It is the largest producer in the world of milk, cashew nuts, coconut, tea, ginger, turmeric and black pepper. It is the second largest producer of wheat, rice, sugar, groundnut and inland fish. It is the third largest producer of tobacco. India accounts for 10 per cent of the world’s fruit production, ranking first in production of banana and sapota. The total food production in India is likely to double in the next ten years and there is an opportunity for large investments in food processing technologies, skills and equipment, especially in areas of Canning, Dairy and Food Processing, Specialty Processing, Packaging, Frozen Food/Refrigeration and Thermo Processing, Fruits & Vegetables, Fisheries, Milk & Milk Products, Meat & Poultry, Packaged/Convenience Foods, vegetable production, organic farming ,agriculture waste management,vermi-compost,production of Alcoholic Beverages & Soft Drinks and Grains are important sub-sectors of the food processing industry.

The potential that the country has is yet to be exploited for best output . If we look at it as livelihood activity we find 50 percent of the population contributing only 17% of the GDP. The agriculture growth is less than the growth of the economy. In spite of having good percentage of fertile soil, average yield in India is about 30% to 50% than that of world. So what are the factors that Govt. agencies and NGOs need to look at before implementing agro based livelihood projects?

UN establishes that India needs to do resource mobilization, improve project management and implementation in rural areas. Like providing advanced farming skills to farmers, irrigation facilities to overcome water shortage, proper storage facilities, better market linkages and high value for the produce, improve availability of high-yield varieties of seeds and advanced research and development should be done to improve per-hectare yield of crops in India. The govt. and research institutes are working on stem cell research, nanotechnology to improve the yield but our nation is much dependent on the monsoon and major areas of the country are facing severe droughts.

Despite various schemes like Gramin Bhandaran Yojna, Rashtriya Krishi Vikas Yojana, National Food Security Mission, National Horticulture Mission etc. and increased grant allocation from Rs 5560.00 crore in 2007-08 to Rs. 20208.00 crore in 2012-13 still everyday there are news of farmer suicides and why not when farmers earn merely Rs 1500 per month. Efforts should be made by Government, Donors, CSR organizations, NGOs to increase their income by enhancing their skills in modern agricultural techniques and practices which would increase the yield, contract farming, group farming, cooperatives, multi cropping techniques, production of cash crops, credit facilities etc. should be promoted so that the risks can be mitigated and their standard of living can be improved. Packaging and marketing of the produce should be the priority. One Block One Product is an efficient way to promote produces at national and international level. The ambitious project of connecting the major rivers should be implemented before its too late. With all these efforts we hope that the present situation gets better and the Agriculture sector gets revamped.